Credit Card Rates, Fees Stabilize After Reform

CUs continue to charge fewer and lower card fees than banks.

Credit card holders are seeing stabilized interest rates, the elimination of over-limit penalty charges, a reduction in late fees charged by banks, and minimal changes in annual fees since the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 took effect.

This is the latest in a series of reports examining how consumer credit cards offered online by the nation’s 12 largest banks and 12 largest credit union issuers. Together, these institutions control more than 90% of the nation’s outstanding credit card debt.

This report measures how the industry has changed since the passage of the Credit CARD Act. Key findings:

• Penalties cost less. Since the enactment of the legislation, over-limit penalty fees have all but vanished. Only 11% of bank credit cards now include them, while the largest credit unions have eliminated them entirely.

Pew’s research finds that late fees continue to be widespread. However, the cost of fees has decreased now that the law limits first-time late fees to $25 in most cases.

• Annual fees have changed little. Last year, roughly 14% of both bank and credit union cards carried annual fees. In 2011, that number held steady for credit union-issued cards, and rose to 21% for bank-issued cards.

The amount charged for annual fees remained at a median of $59 for banks and $25 for credit unions. Forty-percent of cards with annual fees included no-fee promotions for the first year.

• Over-limit penalty fees have become increasingly rare. Only 11% of bank credit cards now carry them (down from 23% in 2010 and more than 80% in 2009), while the largest credit unions have eliminated over-limit fees completely.

Late fees continued to be included on more than 95% of all credit card products.

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